***Closed*** SPY iron condor initiated on 20 Aug 2010
20 Aug: Initiate Trade
SPY (Standard & Poors Dep Rec) Iron Condor initiated on 20 Aug 2010
Trade Type: Low Probability, High Reward Iron Condor
Trade Summary
20 Aug 2010
SPY at 107.15 (-0.74)
28 days to expiration
Action: Sell a new iron condor for Sep expiration.
Sell to open SPY Sep 111 Call
Buy to open SPY Sep 113 Call
Sell to open SPY Sep 104 Put
Buy to open SPY Sep 102 Put
For a net price of $0.99 to $1.01 credit or better. [All TOS autotrade participants were filled at $0.99 credit.]
Net margin required: $101 per entry
Analysis
This is our 1st trade for September and hopefully we can add on a few more trades. We had only 1 trade for August mainly because we were uncertain about the signals the market was showing. And it turned out that we were right to have very little position for August. With the kind of market actions that we saw for the past weeks, it was easier to suffer a loss than to generate a profit.
For this iron condor for Sep, we are risking $101 to make $99. That gives us a risk/reward ratio (R3) of 1.02 with a probability of around 42.86%. For each iron condor, we will be short about 3.21 delta. We expect the market to trade around the current level for a few days to take a break from the volatility. Whatever happens next is anybody’s guess.
Our breakeven points are 111.99 on the upside and 103.01 on the downside. As long as the SPY trades between these values, we’ll have a very decent profit on risk.
We’ll be keeping a very close watch on the market. If the bad news keeps coming up, we may try to maintain a net short portfolio.
Good trading,
Gary
